March Vastness: Blanket Policies on Employee Salary and Discipline Disclosures Unlawful, Says D.C. Circuit Court

This past week, the D.C. Circuit Court of Appeals issued an important decision addressing two on-the-bubble workplace confidentiality policies – one which made the cut, while the other one made its way over to the legal equivalent of the NIT.  The decision explored the boundaries of workplace directives related to the discussion of salary and employee discipline information and non-disclosure in investigations.

Brief Procedural and Legal Backdrop

The decision, Banner Health System v. NLRB, emerged from discovery obtained by the NLRB in an unfair labor practice case against the company.  Discovery unearthed two documents: (1) a confidentiality agreement that Banner Health required all new hires to sign; and (2) an interview form utilized by Banner Health’s human resources consultant for investigations.

The confidentiality agreement directed Banner Health workers to not discuss their co-workers, “private employee information (such as salaries, disciplinary action, etc.)” unless the information was “shared by the employee.”  Separately, the interview form directed investigators to request non-disclosure from employees subject to investigatory interviews.

The NLRB found that both documents impermissibly infringed on the workers’ Section 7 rights under the National Labor Relations Act (“NLRA”) to discuss the terms and conditions of their employment.

The Confidentiality Agreement Went Too Far

The D.C. Circuit’s decision concerning the confidentiality agreement was a proverbial layup for the court—as it found that the agreement struck at the “heartland of Section 7 activity,” and that the safe harbor language permitting discussion of salary or discipline when disclosed by the subject employee did not salvage it.  The court reasoned that Section 7 extends to protection of information innocently obtained making this safe harbor language unworkable in practice.  Ultimately, the court found that a reasonable employee could well understand the company’s prohibition of salary and disciplinary-based discussions were the very types of discussions that Section 7 protects and that the agreement curbed.

The Investigation Non-Disclosure Policy Was Fine in Context

While the court would have been troubled by a blanket policy against disclosing the investigation, it did not find evidence of such a policy here despite the language in the interview form.   While this language set forth a scripted request for non-disclosure, the company’s human resources consultant had testified in the prior proceeding that she would only request non-disclosure for certain sensitive investigations and not in all investigations.

Though the NLRB deduced and determined from this testimony that Banner Health engaged in a policy of categorical non-disclosure in an entire subset of investigations (like those involving sexual harassment), the court disagreed with these deductions, and found that the script, standing alone, might chill workers Section 7 rights, but that no evidence suggested employees were aware of the interview form or its contents.  Further, the court reasoned that the consultant’s testimony was too “terse and unclear” to support the NRLB’s conclusion that Banner Health employed a blanket policy of investigatory non-disclosure.

Implications

Because the NLRB has interpreted Section 7 to apply to both organized and non-unionized settings, Banner Health has broad implications.

• First, a policy completely banning discussion of salaries or employee discipline will likely violate the NLRA absent a legitimate and substantial business justification for the rule that outweighs the adverse effect on the interests of the employees -- a limited exception. The Banner court did not mince words, as it found that these topics strike at the “heartland” of employees’ Section 7 rights.  Indeed in other settings, discussion of salary information has come to the forefront of the pay equity debate.  Just by way of example, the Pay Equity Act, which goes into effect in Massachusetts next July, bars employers from asking prospective employees about their salary history or from seeking salary history information from their current or former employers.
• Similarly, in the investigation setting, a blanket policy mandating confidentiality will also likely become problematic. The Banner court dismissed the NLRB’s arguments on evidentiary grounds, but the tone of the decision suggests that a blanket non-disclosure policy, the investigatory equivalent of a full court press, may not withstand scrutiny.
• At the same time, the court, contrary to the hopes of many, declined to opine on whether and when employers may require employees to keep an investigation confidential.  The NLRB says employers should make that decision on a case-by-case assessment.  Others have said that such a rule doesn't work, especially when performing a discrimination or harassment investigation.  Even the EEOC has voiced its concerns.  At least for now however, employers should continue to take a measured approach, which balances the integrity of investigations (including the need to protect complainants, promote witness candor and avoid the destruction of evidence) with employees’ rights to discuss workplace concerns.
• The Banner Health decision provides a good spur for spring cleaning: employers and their counsel should take a close look at standard language in confidentiality agreements and policies surrounding investigatory confidentiality to ensure that well-intentioned strictures do not impermissibly infringe on employees’ rights to discuss critical terms and conditions of employment, like salary and disciplinary measures.

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